Five ways to help boost U.S. job creation

Here’s how to get more people hired — if Washington will help

WASHINGTON (MarketWatch) — The U.S. economy is not creating new jobs as fast as it once did.

Nobody is really sure how to crank up the great American jobs machine to match the performance of the mid-1980s or late 1990s, but economists point to a number of things that could help improve hiring.

Here’s five things the U.S. could do. The catch? All would require help from Washington — no sure thing in the highly charged political climate of the nation’s capitol. Read more about January jobs data.

ReutersPresident Barack Obama (R) and House Speaker John Boehner can’t agree to agree.

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Eliminate budget uncertainty

That’s another way of saying Washington should get its act together on spending and deficits. Stop with the constant battles over the debt ceiling and annual budget — they unnerve companies, consumers and investors.

A debt-ceiling fight hurt the economy in the summer of 2011 and the lingering threat of another showdown is a drag now, economists say. The vote earlier this month by Republicans to suspend the debt ceiling until late May only puts off the dispute for a few months.

Instead, Democrats and Republicans need to agree to a long-term budget deal to reduce the gargantuan U.S. debt over time. Even if neither party likes everything in a deal, further delays will only deaden the hopes of millions of Americans who still cannot find a job.

“Fiscal uncertainty has been a very negative factor for growth,” said George Mokrzan, director of economics at Huntington Bancshares. “Growth will likely remain choppy without fiscal reforms.”

ReutersCosts and delays linked to new regulations have ensnared consumers and businesses alike.

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End regulatory drag

Businesses complain the Obama administration has saddled them with countless regulations that stifle growth. Small businesses in particular have been hurt, they say.

What’s worse, though, is waiting for the government to finalize new rules in important areas such as banking and health care. All the uncertainty keeps companies from hiring and investing as much as they would like.

The faster the rules are drawn the easier it will be for businesses to act — even if they hate the new rules.

“Right now businesses are in a defensive posture,” said Robert Dye, chief economist of Comerica Bank in Dallas. “If we do some of these things business confidence would improve.”

Yet some business leaders worry the Obama administration could pursue an even more aggressive regulatory agenda in areas such as clean energy. The Republican-led House is unlikely to agree to any sweeping bills on climate change or other issues dear to the White House. Obama might be tempted to use his vast discretionary power to get around Congress.

Reform the tax code

The U.S. tax code was last overhauled in 1986 as part of a grand bargain between Democrats and Republicans. The code was simplified, rates lowered, loopholes eliminated and things looked pretty good for awhile.

It didn’t take long, though, for Congress to start jamming up the tax code and making it as complicated as ever. More than 25 years later, Americans are paying the price of a byzantine tax code in the form of fewer jobs created and less productivity, according to a number of studies.

The complexity of the tax system is a big hindrance in a hyper-competitive global economy, analysts on both left and right agree.

That’s where the agreement ends. Obama and Republican leaders have made a lot of noise about striking another grand bargain to reform the tax code, but two years of on-and-off discussions have produced zilch.

Liberals want reform to raise more tax revenue for the government. Conservatives want to use any revenue generated by reform to lower the overall tax burden for businesses and consumers.

Various interest groups on each side, meanwhile, don’t want to see their own oxen gored. Clean-energy interests want Obama to keep pushing subsidies their way, for example, while big oil companies have prodded lawmakers in states with large energy industries to maintain longstanding tax breaks.

“I don’t think tax reform is going to happen overnight,” said Scott Anderson, chief economist at Bank of the West.

Getty ImagesThe rise of “fracking” and shale oil has fueled a rebirth in the domestic energy industry.

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Boost U.S. energy production

The U.S. is undergoing an energy renaissance and rapidly boosting its production of oil and gas. The breakthrough is the result of hydraulic fracturing, a process of recovering fuel in tight shale-rock formations underground that used to be inaccessible.

The use of “fracking” has made vast tracts of land a potential goldmine. Large deposits of fuel are located in the Northeast, South, Southwest and Midwest. Some experts call the U.S. the Saudi Arabia of shale oil and gas.

Already, tens of thousands of jobs in states such as Texas, Colorado, North Dakota and Pennsylvania have been created by the new form of fuel extraction — with possibly many more to come.

“Its important. It’s big. It adds thousands of jobs,” said chief economist Stuart Hoffman of PNC Financial Services in Pittsburgh, a region that has benefited economically from fracking. “It has a lot of promise to become much bigger.”

So far, most of the fuel produced by fracking has been extracted from state lands. The White House could promote further development by opening federal lands and approving related projects like the Keystone pipeline. At the very least, the administration could maintain a light regulatory touch, analysts say.

Yet environmental groups close to the White House are pushing for more federal oversight and tougher regulations because of concerns — largely unfounded so far — about water pollution. It’s unclear what stance Obama will take.

Greg Morcroft/MarketWatchBrooklyn bridge might not be falling down, but a lot of America is slowly falling apart.

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Rebuild America

The U.S. is set to spend more than $1.5 trillion through the rest of the decade to rebuild and upgrade the country’s roads, bridges, water systems, power grid and other parts of the national infrastructure.

Yet a report this month by the American Society of Civil Engineers asserts that another $1 trillion is needed to maintain the nation’s skeletal structure at adequate levels.

Most economists agree the U.S. needs to spend more than it now does. All that investment would create hundreds of thousands of good-paying jobs.

After a string of $1 trillion federal deficits, however, lawmakers aren’t about to embark on a major spending spree, especially Republicans.

Obama has pushed for more investment in the nation’s infrastructure, but conservatives won’t go along unless spending cuts are found elsewhere in the budget. The two parties also partly disagree over what projects should get priority.

Any extra money that could be found, though, could be put to good use. Improving the nation’s infrastructure prevents power outages, reduces traffic, improves shipping speed, lowers transport costs and makes a nation a more attractive to do business in a globalized economy.

“If we can do some of these things, consumer and business confidence would improve and it would help growth,” Comerica’s Dye said.

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